Greg Mennis, assistant secretary for fiscal policy in the Executive Office for Administration and Finance, said the measure would trim an estimated $20 billion over 30 years by allowing government employers to change the terms for health-insurance coverage owed to employees who will retire in more than five years.

The bill targets other post-employment benefit costs, or OPEB costs. The "other" refers to benefits other than pensions and the overwhelming majority of OPEB costs are in health insurance. Mennis said the OPEB bill is part of a three-pronged approach to deal with unfunded liabilities, and the first two prongs were passed last year in the form of municipal health-care reform and pension reform.

The pension reform legislation created a special OPEB Commission, which made a list of recommendations that made its way into the bill. Mennis stressed that the commission was bipartisan and included all related parties, including representatives of labor and municipalities.

Currently, all town employees, including part-time employees, are eligible for lifetime health insurance upon retirement if they spend 10 years working for a town, city or the state. Under the bill, the retirement age would increase from 55 to 60 and the number of years required to work would increase to 20.

Advertisement

The change would not affect people already retired or employees with 20 years of experience who are within five years of retirement age. There is also an exemption for employees with nine years of service who are within five years of Medicare eligibility. Certain teachers nearing retirement would be able to retire at age 57.

David Holway, president of the National Association of Government Employees, said the bill is unfair to workers. On Tuesday a message went up on his union's website urging members to ask their state representatives to reject the bill.

Although the legislation would not affect those who are already retired, it would affect some current employees.

"We believe that the terms and conditions of a person's employment should be respected," said Holway. He said cities and towns made a deal when they hired their workers and the bill would allow their employers to break that promise.

Holway said his members share the governor's budget concerns and accept restrictions on new workers who are drafting new agreements.

"We had all the stakeholders at the table and it was a very comprehensive conversation," said Mennis when asked about the opposition.

Ralph White, president of the Retired State, County and Municipal Employees of Massachusetts, said he's concerned the bill might change in the Legislature and reduce benefits to people currently retired.

"It's a problem because retirees are retired," said White. He said some haven't worked in 20 years and have their finances carefully planned.

"The original intent was to close the door for part-time employees," said White. He said under the current system someone could be part of town government for 10 years as a selectman or a part-time worker, retire and get health insurance for life at the expense of the town.

"That wasn't fair," said White.

Some parts of the bill have drawn criticism from the Massachusetts Municipal Association and the Massachusetts Taxpayers Foundation for a provision that freezes the portion towns and cities have to kick in for retiree health-insurance premiums.

State law currently requires government employers to contribute a minimum of 50 percent of health-insurance premiums for their retired employees. Geoff Beckwith, executive director of the Massachusetts Municipal Association, said most municipalities pay about 75 percent, and under the governor's bill those rates would be locked in for the life of the employee once they retire.

"That is really the only tool cities and towns have to control health costs without turning to the Legislature," said Beckwith. He said health-insurance costs are increasing by 5 percent each year while property-tax increases are capped at 2 1/2 percent, making the costs unsustainable. He added that a conservative estimate predicts health-care costs will double in 14 years.

There is also a three-year moratorium on changing current contribution rates for all employees, not just the ones who are retired or about to retire. White said that's what caused the town of Winchester to drop its contribution rate to 50 percent before the legislation can take effect.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, called the freeze a "poison pill." He said the benefits promised to government employees within the state were unrealistically high and provide much more than what any private-sector employer gives today.

Widmer added that the bill will give few savings over the next decade.

"This is a good first step, but it's a long way from solving the problem," said Widmer. "We have a lot more work to do to try to rein in the cost of these benefits."

Welcome to your discussion forum: Sign in with a Disqus account or your social networking account for your comment to be posted immediately, provided it meets the guidelines. (READ HOW.)
Comments made here are the sole responsibility of the person posting them; these comments do not reflect the opinion of The Sun. So keep it civil.